Seeking Advice on Tenant's Unpaid Increased Security Deposit

[Amir P.]

Hello everyone,

I hope you are doing well. I have a situation with one of my tenants that I would appreciate some advice on. Here's a brief overview:

I own a triplex, and one of the tenants is an elderly lady who tends to be quite grumpy and complains frequently. Despite this, I have invested in various improvements to enhance her living conditions. When I purchased the property, I inherited her as a tenant and decided to keep her while stabilizing the asset.

About a year ago, I had her sign a new lease and increased her rent accordingly. Recently, I offered to raise her rent once again, and she agreed and signed a new lease. The new lease requires her to provide a check for an increased security deposit matching the new rent at the time of signing. However, she has not paid this deposit yet.

I have diligently followed up with her via calls and text messages every couple of weeks over the past 60 days, but she has been ignoring my attempts to communicate. Since the full security deposit hasn't been paid, I have not finalized the new lease.

My intention is to have a tenant who pays the rent and fulfills the security deposit requirement. While I would ideally prefer to find a new tenant, for now, I have decided to keep her as long as she meets these conditions.

Given the circumstances, I would greatly appreciate any advice on how to handle this situation. Can I proceed with eviction if she fails to pay the increased security deposit? What other options or steps can I take to address this matter appropriately?

Thank you in advance for your guidance and suggestions.

[Eric Mcginn]

Quote from @Amir P.:

Hello everyone,

I hope you are doing well. I have a situation with one of my tenants that I would appreciate some advice on. Here's a brief overview:

I own a triplex, and one of the tenants is an elderly lady who tends to be quite grumpy and complains frequently. Despite this, I have invested in various improvements to enhance her living conditions. When I purchased the property, I inherited her as a tenant and decided to keep her while stabilizing the asset.

About a year ago, I had her sign a new lease and increased her rent accordingly. Recently, I offered to raise her rent once again, and she agreed and signed a new lease. The new lease requires her to provide a check for an increased security deposit matching the new rent at the time of signing. However, she has not paid this deposit yet.

I have diligently followed up with her via calls and text messages every couple of weeks over the past 60 days, but she has been ignoring my attempts to communicate. Since the full security deposit hasn't been paid, I have not finalized the new lease.

My intention is to have a tenant who pays the rent and fulfills the security deposit requirement. While I would ideally prefer to find a new tenant, for now, I have decided to keep her as long as she meets these conditions.

Given the circumstances, I would greatly appreciate any advice on how to handle this situation. Can I proceed with eviction if she fails to pay the increased security deposit? What other options or steps can I take to address this matter appropriately?

Thank you in advance for your guidance and suggestions.

Honestly, if I were you I’d forget about it and move on. 
Does she pay her rent on time? Is she a good tenant otherwise? 
I’ve never requested additional security deposit when raising the rent. 

just my opinion 

[Amir P.]

Thanks Eric! 

I may consider that. Its not so much about the additional amount, it's more about following the rules and the lease agreement. Previous landlord wasn't managing the tenants and property, so she thinks she is an exception to the rules. I just didn't want this to become a habit and norm for her. 

[Richard F.]

Aloha,

Did you make sure she understood that the SD needed to be increased, and why? If so, depending on the terms of the existing Rental Agreement and local law, fund the SD out of Rent Payment first, then invoice her for short rent and late fee, with a deadline of X days to "cure" the breach of contract. If she does not make the deadline, start the eviction process.

Conversations, calls and texts are largely useless as evidence, everything should be done in writing, either snail mail (Certified, Return Receipt Requested) or if she has email, that provides a clear record. We always give a deadline for document signing and initial payment/SD.

[David Constant]

@Amir P. I can imagine that this has been a frustrating process for you. It sounds like you've taken a lot of the proper steps to make sure you're in line with local and federal law while operating with common sense and humanity. 

Here are a couple of quick tips:

1. put everything in writing and keep a copy yourself: phone calls are great for additional communication, but make sure your primary mode of communication can be tracked. In the land of landlord-tenant interactions, it's essential you have a paper trail.

2. connect with a trusted advisor - both a real estate agent and a real estate attorney: at the end of the day, your real estate attorney (and agent) are going to know the specific laws, rules, and regulations that are in play in a given scenario. I always advise my clients to work with an attorney they trust who will protect them and their interests. Depending on where you are located, I can point you to a number of attorneys that would be happy to connect with you.

 DM me if you want to connect 1-on-1.

[Nathan Gesner]

Quote from @Amir P.:

This is an important lesson. If a Tenant disrespects you, your lease, or your rules, then you should get rid of them before it comes back to bite you.

"Dear Tenant,

I offered you a new lease that included a rent increase and a requirement to increase your deposit. I've reminded you multiple times, but you refuse to comply or even communicate with me. Because you failed to provide me with the additional funds, I am hereby terminating our agreement and expect you out no later than 11:59PM on [DATE]. If you fail to leave, my attorney will file for eviction and we will seek compensation for court and attorney fees."

[Samuel Eddinger]

@Amir P. - what does your lease say?  I run a PM company in CT.  My lease states that the oldest bill is paid first.  In this case, the payment she makes goes to the increase in the security deposit and then the rent so she would technically receive late fees and then could be evicted for non-payment of rent.

In general terms, I do not increase a security deposit mid-lease for exactly these type of reasons.  You should be making a decision if you are going to keep her or not and the security deposit amount really does not make any difference.

DM me if you would like to discuss this further.  I'd be happy to give you some pointers on things we do to help minimize situations like this.

[Theresa Harris]

I don't bother increasing the deposit when I increase the rent each year when renewing the lease.

If you don't want her as a tenant, then simply don't renew her lease.

[William Powell]

Asking for increased security deposit for an existing tenant seems a little greedy imo. If a tenant is paying I just tell them there will be an increase then have them sign the new lease. All new tenants are subject to increased security deposits. As per my marketing. Remember we are in the business of people not just income. If we treat people like we want to be treated I think everything will work out.

[Amir P.]

Quote from @Richard F.:

Aloha,

Did you make sure she understood that the SD needed to be increased, and why? If so, depending on the terms of the existing Rental Agreement and local law, fund the SD out of Rent Payment first, then invoice her for short rent and late fee, with a deadline of X days to "cure" the breach of contract. If she does not make the deadline, start the eviction process.

Conversations, calls and texts are largely useless as evidence, everything should be done in writing, either snail mail (Certified, Return Receipt Requested) or if she has email, that provides a clear record. We always give a deadline for document signing and initial payment/SD.

 Thanks for the advice, Richard! She paid the security deposit on the last day of the month, before her new lease started.

Yes, she understands what is needed. Along with her lease renewal, I provided a cover letter detailing what needs to be done in a couple bullet points including deadline to returned signed documents along with SD payment. 

That is a good way to approach this to first fund the SD and then rent, never thought of it as a possibility.

She ultimately said the contract wasn't in effect until June 1st, so that is why she paid a day before that. We have a 10 days grace period for rent in CT, she also pays her rent on the 9th every month.

Noted about creating a paper trail. I am pretty good about that though, any phone conversations is followed with a written summary letter or email. 

[Amir P.]

Quote from @David Constant:

@Amir P. I can imagine that this has been a frustrating process for you. It sounds like you've taken a lot of the proper steps to make sure you're in line with local and federal law while operating with common sense and humanity. 

Here are a couple of quick tips:

1. put everything in writing and keep a copy yourself: phone calls are great for additional communication, but make sure your primary mode of communication can be tracked. In the land of landlord-tenant interactions, it's essential you have a paper trail.

2. connect with a trusted advisor - both a real estate agent and a real estate attorney: at the end of the day, your real estate attorney (and agent) are going to know the specific laws, rules, and regulations that are in play in a given scenario. I always advise my clients to work with an attorney they trust who will protect them and their interests. Depending on where you are located, I can point you to a number of attorneys that would be happy to connect with you.

 DM me if you want to connect 1-on-1.

 Appreciate it, David! 

I can always use a good advisor specially in this sort of odd situation. I'll DM you shortly

[Amir P.]

Quote from @Nathan Gesner:

Quote from @Amir P.:

This is an important lesson. If a Tenant disrespects you, your lease, or your rules, then you should get rid of them before it comes back to bite you.

"Dear Tenant,

I offered you a new lease that included a rent increase and a requirement to increase your deposit. I've reminded you multiple times, but you refuse to comply or even communicate with me. Because you failed to provide me with the additional funds, I am hereby terminating our agreement and expect you out no later than 11:59PM on [DATE]. If you fail to leave, my attorney will file for eviction and we will seek compensation for court and attorney fees."

 Thank you, Nathan! 

She paid the increased in SD a day before her new lease starts; she does the same with rent, paying a day before it's late. I am saving this to use next time a similar situation rise up which is not unlikely.  

[Amir P.]

Quote from @Samuel Eddinger:

@Amir P. - what does your lease say?  I run a PM company in CT.  My lease states that the oldest bill is paid first.  In this case, the payment she makes goes to the increase in the security deposit and then the rent so she would technically receive late fees and then could be evicted for non-payment of rent.

In general terms, I do not increase a security deposit mid-lease for exactly these type of reasons.  You should be making a decision if you are going to keep her or not and the security deposit amount really does not make any difference.

DM me if you would like to discuss this further.  I'd be happy to give you some pointers on things we do to help minimize situations like this.

 Thank you, Samuel!

My lease doesn't have anything specific about that. Although now I am thinking it is good to add it in. 

I decided to keep her for one more year while I stabilize the property, figure I can deal with issues like this as long as she is paying rent. I inherited her with the property, and she is not an ideal tenant by any means.

I'll DM you, would like to hear more of your insight to help avoid these issues going forward.
 

[Chris Merchant]

Quote from @Amir P.:

Quote from @Richard F.:

Aloha,

Did you make sure she understood that the SD needed to be increased, and why? If so, depending on the terms of the existing Rental Agreement and local law, fund the SD out of Rent Payment first, then invoice her for short rent and late fee, with a deadline of X days to "cure" the breach of contract. If she does not make the deadline, start the eviction process.

Conversations, calls and texts are largely useless as evidence, everything should be done in writing, either snail mail (Certified, Return Receipt Requested) or if she has email, that provides a clear record. We always give a deadline for document signing and initial payment/SD.

 Thanks for the advice, Richard! She paid the security deposit on the last day of the month, before her new lease started.

Yes, she understands what is needed. Along with her lease renewal, I provided a cover letter detailing what needs to be done in a couple bullet points including deadline to returned signed documents along with SD payment. 

That is a good way to approach this to first fund the SD and then rent, never thought of it as a possibility.

She ultimately said the contract wasn't in effect until June 1st, so that is why she paid a day before that. We have a 10 days grace period for rent in CT, she also pays her rent on the 9th every month.

Noted about creating a paper trail. I am pretty good about that though, any phone conversations is followed with a written summary letter or email. 

Wow, she seems to be one of them people that knows the laws better than some attorneys, and is going to purposely push the envelope knowing what she can get by with legally.  At least she paid though and does pay before the grace period ends, which though it is annoying it is better than lost revenue all together.

[Colleen F.]

@Amir P.  I am glad she paid. I don't usually increase the security deposit but I do put am amount for security deposit and Last months rent on the face page of every renewal. I can't count the times people recall they deposited more than they did or claim they  paid last months rent and they didn't.

[Amir P.]

@Colleen F.

That's a good idea, I'll try that in the future. I can already see her wanting to use security deposit for last month rent, even though the lease clearly outlines not to do that.

[Corby Goade]

Honest, but unpopular answer; You need to hire a professional property manager, you are too close to this situation and don't know your rights or the laws. 

When you have a high maintenance and difficult tenant, renewing doesn't make it better. Investors are always talking about passive income and "mailbox money," but self managing like this is anything but passive. 

Your time is better spent finding new deals and scaling, not "saving" 9% and dealing with the day to day minutiae of tenant drama.

Now that I'm off of my soapbox, in MOST cases, fees are applied to a ledger before rents, so if she has not paid her fees, she is two months behind on rent, so yes, theoretically you could file for eviction, but there are many, many local and state laws surrounding this and every lease is different, so without knowing all of those details, you can't definitively answer this question. 

Finally- for future reference, you need to make your lease NOT binding until all fees and deposits are paid, that's your ticket out of these situations.